Case Law Details
Aruni Stone Crusher Vs Assistant Commissioner (Orissa High Court)
The case before the Orissa High Court arose from proceedings initiated under Section 74 of the Central Goods and Services Tax Act, 2017 and the Odisha Goods and Services Tax Act, 2017 for the tax periods 2018–19 to 2022–23. The petitioner had initially received a Demand-cum-Show Cause Notice dated 26.06.2025 and subsequently filed an application for rectification under Section 161 on 24.08.2025. When the rectification application was rejected, the petitioner filed a writ petition before the High Court, which was disposed of on 25.09.2025 with a direction to the authority to consider the rectification application and proceed with the earlier demand notice.
Instead of proceeding with the earlier notice dated 26.06.2025 as directed by the Court, the Proper Officer issued a fresh Demand-cum-Show Cause Notice dated 17.11.2025 along with a Summary of Show Cause Notice in Form GST DRC-01 dated 25.11.2025, covering the financial years 2018–19 to 2022–23. The petitioner challenged this action by filing another writ petition before the High Court.
A notice for personal hearing was issued on 08.12.2025 fixing the hearing on 18.12.2025. During the hearing, the petitioner informed the authority that a writ petition had already been filed before the High Court challenging the revised Demand-cum-Show Cause Notice and requested that the matter be kept in abeyance pending the Court’s decision. Despite being informed of the pending writ petition, the authority proceeded to pass an Order-in-Original on 19.12.2025 finalizing the demand under Section 74. This order was challenged by the petitioner in the present writ petition.
The petitioner argued that the issuance of the fresh Demand-cum-Show Cause Notice itself exceeded the jurisdiction of the authority and that the proceedings were barred by limitation. It was also contended that the final order dated 19.12.2025 was passed without providing a proper opportunity of hearing and despite the authority being informed about the pending writ petition challenging the revised notice. The petitioner therefore claimed that the order violated the principles of natural justice and was liable to be quashed.
The Department contended that the petitioner had an alternative remedy of approaching the appellate authority and that the writ petition had been filed to bypass that statutory remedy.
Upon examining the record, the High Court observed that its earlier order dated 25.09.2025 had directed the authority to consider the rectification application and proceed in connection with the original Demand-cum-Show Cause Notice dated 26.06.2025. However, instead of following that direction, the Proper Officer issued a fresh notice dated 17.11.2025 along with a summary notice dated 25.11.2025.
The Court further noted that the petitioner had informed the authority during the personal hearing on 18.12.2025 that a writ petition had been filed challenging the revised notice and had requested that the proceedings be kept in abeyance. Despite this, the authority passed the adjudication order on the very next day, i.e., 19.12.2025. The authority justified the action by stating that the issue was time-bound, as the last date to issue the order for the financial year 2018–19 was 31.12.2025.
The High Court found that the order had been passed with undue haste, causing serious prejudice to the petitioner. The Court held that adherence to the principles of natural justice is intended to ensure substantive justice and not merely to complete a ritual hearing. It observed that actions taken in undue haste may be arbitrary and cannot be sustained in law. Relying on judicial precedents, the Court emphasized that actions of the State or its instrumentalities must be fair, legitimate, and in accordance with the rule of law.
Considering these circumstances, the High Court concluded that the impugned order dated 19.12.2025 was the result of arbitrary exercise of power and amounted to a violation of the principles of natural justice as well as Article 14 of the Constitution of India. Consequently, the Court set aside the Order-in-Original passed by the Assistant Commissioner, CGST and Central Excise, Jajpur Division.
The Court directed the petitioner to submit its explanation or objections in response to the Demand-cum-Show Cause Notice dated 17.11.2025 read with the summary notice dated 25.11.2025 within seven days. The authority was directed to consider the reply and pass a fresh order within fifteen days thereafter after granting the petitioner an opportunity of personal hearing. The Court also directed that no unnecessary adjournments be granted and expected the petitioner to cooperate with the adjudication proceedings.
With these directions, the writ petitions were allowed and disposed of, and the impugned order dated 19.12.2025 was set aside.
FULL TEXT OF THE JUDGMENT/ORDER OF ORISSA HIGH COURT
The petitioner being served with Demand-cum-Show Cause Notice dated 26.06.2025 for the tax periods 2018-19 to 2022-23 under Section 74 of the Central Goods and Services Tax Act, 2017/Odisha Goods and Services Tax Act, 2017 (Collectively, “the GST Act”) filed application for rectification on 24.08.2025 under Section 161.
1.2. Since the said application was rejected, a Writ Petition being W.P.(C) No.27456 of 2025 was filed which came to be disposed of on 25.09.2025 with a direction to consider the said application for rectification. Consequent upon such direction, a fresh Demand-cum-Show Cause Notice dated 17.11.2025 and Summary of Show Cause Notice in Form GST DRC-01 dated 25.11.2025 by clubbing the tax periods contained in Financial Years 2018-19 to 2022-23 was issued. Assailing such action of the authority, the petitioner approached this Court in W.P.(C) No.36758 of 2025.
1.3. The petitioner was served notice dated 08.12.2025 for personal hearing on 18.12.2025. On the said date, it was brought to the notice of the concerned authority that the petitioner has approached this Court challenging the fresh Demand-cum-Notice as aforesaid in writ petition as the same is contrary to the direction of this Court in Order dated 25.09.2025 in W.P.(C) No.27456 of 2025.
1.4. While the said matter was pending though the petitioner intimated the authority concerned regarding filing of the Writ Petition on 18.12.2025, the authority without awaiting order from this Court, proceeded to pass Order-in-Original on the very next date, i.e., 19.12.2025. The present Writ Petition being W.P.(C) No.1504 of 2026 is filed challenging the said order dated 19.12.2025.
2. Mr. Jagabandhu Sahoo, learned Senior Advocate assisted by Ms. Kajal Sahoo, learned Advocate for the petitioner submitted that the Assessing Officer having issued fresh Demand-cum-Show Cause Notice dated 25.11.2025 exceeded his jurisdiction inasmuch as he could not proceed with the matter as the proceeding itself stood barred by limitation. Had the authority afforded opportunity of hearing, the petitioner would have proffered appropriate explanation. Since the Assessing Officer proceeded to pass final orders on 19.12.2025 without affording opportunity of hearing, though he was intimated about challenge being made to Demand-cum-Show Cause Notice dated 25.11.2025 in W.P.(C) No.36758 of 2025, he would urge that the order dated 19.12.2025, which is the subject-matter of Writ Petition being W.P.(C) No.1504 of 2026, is liable to be quashed for lack of adherence to the principles of natural justice.
3. Mr. Bismay Anand Prusty, learned Senior Standing Counsel for the opposite parties-Department while seeking to justify the action of the Proper Officer submitted that the petitioner has alternative remedy to approach the Appellate Authority, which was circumvented in the present case.
4. Heard Mr. Jagabandhu Sahoo, learned Senior Advocate assisted by Ms. Kajal Sahoo, learned Advocate for the petitioner and Mr. Bismay Anand Prusty, learned Senior Standing Counsel for the CGST Department-opposite parties.
5. Perusal of the record reveals that, this Court vide order dated 25.09.2025 passed in W.P.(C) No.27456 of 2025 directed for consideration of application for rectification and further directed the authority to proceed in connection with Demand-cum-Show Cause Notice dated 26.06.2025. As it appears, the Proper Officer instead of proceeding further in connection with said Demand-cum-Show Cause Notice dated 26.06.2025, issued fresh Summary Show Cause Notice dated 25.11.2025 in GST DRC-01 along with Demand-cum-Show Cause Notice dated 17.11.2025 vide Annexure-5 for the Financial Year 2018-19 to 2022-23. Flagging issue of limitation involving mixed question of law and fact, the petitioner preferred W.P.(C) No.36758 of 2025, which fact was intimated to the Assistant Commissioner-cum-Central GST and Central Excise, Jajpur Division, Jajpur Road on 18.12.2025.
5.1. It is ex facie on record that from the Order-in-Original dated 19.12.2025, the authority has finalized the Demand-cum-Show Cause Notice and passed adjudication order under Section 74 of the GST Act.
5.2. Perusal of order dated 19.12.2025, it emanates that:
“… In response, Shri Prafulla Kumar Samal, Advocate, authorized representative appeared before me on 18.12.2025 on the behalf of the notice. He submitted a letter and stated that they filed a writ petition before the Hon’ble High Court of Orissa on 16.12.2025 bearing filing no. D-WPC/52838/2025 and CNR ODHC010921722025 against the revised SCN. Further, he stated that they are expecting the outcome of the petition very soon. Therefore, he requested to keep the hearing in abeyance the outcome of the writ petition. As the issue is in time bound matter such that the issue is related to F.Y.2018-19 and the last date to issued Order in Original is 31st December, 2025, therefore, there is no other option left except to issue the Order in Original in a time bound manner.”
5.3. On noticing such fact, this Court is of the considered view that the authority has passed order with undue
haste, thereby caused serious prejudice to the petitioner. Since there has been flagrant violation of principles of natural justice, the order impugned, i.e., 19.12.2025 cannot be held to be sustained.
5.4. Adherence to principles of natural justice is for doing substantive justice and not for completing a mere ritual of hearing without possibility of any change in the decision of the case on merits. Reference may be had to Krishnadatt Awasthy Vrs. State of Madhya Pradesh, (2024) 4 SCR 151. This Court may also have regard to the decision rendered in Zenit Mataplast Private Ltd. Vrs. State of Maharashtra, (2009) 10 SCC 388 wherein it has been held as follows:
“27. Every action of the State or its instrumentalities should not only be fair, legitimate and above-board but should be without any affection or aversion. It should neither be suggestive of discrimination nor even apparently give an impression of bias, favouritism and nepotism. The decision should be made by the application of known principles and rules and in general such decision should be predictable and the citizen should know where he is, but if a decision is taken without any principle or without any rule, it is unpredictable and such a decision is antithesis to the decision taken in accordance with the rule of law (vide S.G. Jaisinghani Vrs. Union of India, AIR 1967 SC 1427 and Haji T.M. Hassan Rawther Vrs. Kerala Financial Corpn., (1988) 1 SCC 166 = AIR 1988 SC 157).
28. In essence, the action/order of the State or State instrumentality would stand vitiated if it lacks bona fides as it would only be a case of colourable exercise of power. The rule of law is the foundation of a democratic society. ***
39. Anything done in undue haste can also be termed as arbitrary and cannot be condoned in law (vide M.P. Hasta Shilpa Vikas Nigam Ltd. Vrs. Devendra Kumar Jain, (1995) 1 SCC 638 and Bahadursinh Lakhubhai Gohil Vrs. Jagdishbhai M. Kamalia, (2004) 2 SCC 65 = AIR 2004 SC 1159).
5.5. When the present cases are considered in the light of the above exposition of law, the order impugned being perceived as outcome of arbitrary exercise of power offending Article 14 of the Constitution of India as undue haste shown by the Proper Officer is patent on the face of the record.
6. In view of the above, this Court is of the considered opinion that the Writ Petitions deserve to be allowed and are, hereby, allowed. Consequently, the order dated 19.12.2025 passed by the Assistant Commissioner, CGST and Central Excise, Jajpur Division, Jajpur Road vide Annexure-8 enclosed with W.P.(C) No.1504 of 2026 is set aside. It is directed that the petitioner shall submit explanation/reply/objection in connection with Demand-cum-Show Cause Notice dated 17.11.2025 read with summary of Show Cause Notice dated 25.11.2025 with respect to Financial Years 2018-19 to 2022-23 (Annexure-5) enclosed with W.P.(C) No.36758 of 2025 within a period of seven (07) days hence. The aforesaid authority shall do well to consider such Demand-cum-Show Cause Notice dated 17.11.2025 read with summary of Show Cause Notice dated 25.11.2025 and pass fresh order within a period of fifteen (15) days thereafter upon affording opportunity of personal hearing to the petitioner. Needless to observe that no unnecessary adjournments shall be granted and it is desired that the petitioner shall cooperate in the adjudication proceeding.
7. With the aforesaid observations and directions, the Writ Petitions being W.P.(C) No.1504 of 2026 and W.P.(C) No.36758 of 2025 along with Pending Interlocutory Application (s), if any, shall stand disposed of.
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